The Current State of the C-Suite

by Erin Brereton
February 3, 2014

WHAT FIRMS NEED FROM TODAY'S MODERN EXECUTIVES; THE FIRST OF A THREE PART SERIES ON TODAY'S C-LEVEL ADMINISTRATORS

 

In 2012, Dewey & LeBoeuf, LLP, the mega New York-based law firm with a history dating back to 1909, filed for bankruptcy - a move The New York Times referred to as "the largest law firm collapse in United States history."

Whether the firm's aggressive growth attempts, hefty partner recruitment packages or mass partner exodus was to blame, one thing was clear: Its business model hadn't been working.

Dewey had spent top dollar to lure seemingly lucrative partners from other firms; in theory, it had been run by a law leadership dream team. And yet, the firm, which once employed more than 2,500 people in 26 offices, listed $245 million in debt when it folded.

Dewey's demise left the legal industry with a nagging question: Are highly qualified partners really the best choice to run a law firm? And if they aren't fit for the job, then who is?

 

THE RISE OF THE C-SUITE EXECUTIVE ROLE

For decades, law firms like Dewey & LeBoeuf have traditionally been led by attorneys who have been promoted to partner. They determine revenue targets, hiring decisions, budget goals and other firm operations.

However, in recent years, some law firms have undergone a structural shift. As noted in a May 6, 2012 article published in The Wall Street Journal, law firms have begun "increasingly relying on professional managers, once an anomaly in the industry, to run many parts of their operations." Instead of appointing fellow attorneys to head up operations, a number of firms have recruited business professionals from the corporate world to fill newly created C-level roles.

"Law firms have gotten much bigger," says Scott Green, the first CEO and non-attorney to lead 500-lawyer firm Pepper Hamilton LLP. Green holds an M.B.A. from Harvard and a Bachelor of Science in accounting from the University of Idaho. Before joining Pepper Hamilton, he served as global law firm WilmerHale's Executive Director. "Once you get over $200 million in revenue, you need to start having people who know what they're doing running your operations," Green says.

National 650-lawyer firm Drinker Biddle & Reath, LLP, for example, grossed nearly $400 million last year. Chief Marketing Officer John Byrne says that amount would necessitate an infrastructure to support company growth, if the firm were a corporate entity - a thought process that's catching on at some law firms.

"As firms have grown in size and complexity, many have realized the need for more sophisticated staffing and structure," Byrne says.

Hiring C-level (or C-suite) executives - let alone allowing them to run things - was a marked change for the legal industry. As the practice grows in popularity, C-suite executives employed at law firms are finding they face a unique set of challenges. The role often involves different skills than a corporate position with the same title; C-level law firm responsibilities also frequently require specific types of preparation and training.

 

TOOLS OF THE TRADE

Once professionals reach C-level status, they're more likely to use several soft skills than task-specific skills, according to recent research. Executives and researchers have found the following traits to be key C-level success indicators:

Leadership abilities

Based on hundreds of executive search candidate profiles, research by Boris Groysberg, a business administration professor at Harvard Business School who has studied law firms for 12 years, overwhelmingly found that once law firm professionals reach the C-suite level, technical and functional expertise matters much less than leadership skills. "With law firms you see disappear, it's [often] a lack of leadership that contributes to it," Groysberg says.

Strong leadership can make or break a firm. Nearly half of the failed organizations that consulting firm Hildebrandt examined in its 2004 report and 2008 white paper, "The Anatomy of Law Firm Failures," exhibited structural flaws, including unclear goals, strategies and leadership.

A strong grasp of business fundamentals

C-level law firm professionals need a broad skill set. "In corporations, people tend to be a specialist and lead an organization because they do cost cutting or efficiency or something else very, very well," Green says. "At a law firm, they may have to do all those things in a couple-year period."

Marketing and new business expertise, which isn't often imparted in law school, can be a particular issue. Eighty-five percent of the partners who participated in The American Lawyer's 2013 New Partner Survey said they generally felt prepared for their role; the majority who didn't identified one area - business development - as a concern.

Viewing the firm on a broader scale

"Oftentimes, lawyers will expect the people supporting them or managing the firm to have skill sets that mirror their own skill sets," Byrne says. Non-lawyer executives instead need to examine the firm in a different way than the attorneys who are embedded in its day-to-day work.

"Firms are bringing in high-level leaders with strategic or specific experience to bring to the table, not just tactical and operational experience," Byrne says. "You need to be able to see the big picture, but dive deep into details when necessary."

 

NICHE CONSIDERATIONS

Taking Byrne's above comment into consideration, what are some specific areas of training or expertise C-suite executives may need in addition to general business management techniques?

Technology and the C-level executive

In the coming years, C-suite executives will likely face increased technology needs that can range from locating the best time tracking software to maximizing the ways firms virtually interact with clients.

A recent Dell survey found that almost six-in-10 C-suite executives expect their IT function to change significantly during the next three years; 12 percent expect their organization to undergo a complete overhaul.

"Technology, outside of human capital, is one of the biggest costs and is often overlooked," says Scott Simmons, Managing Director of executive search firm Crist/Kolder Associates. "A few executives I've known who have gone into law firms found technology can be one of the biggest eye-openers."

To prepare for future law firm tech needs, C-suite executives should consider the following:

Integrate departments. Byrne and his directors try to meet with the firm's technology department directors every other week to discuss projects that involve knowledge management; communications and social media; and platforms that support how attorneys communicate with clients. "There really is a lot of overlap," Byrne says. "From the backend office situation, we all have to work together."

Strengthen client service. Firms often outsource IT needs they don't fully understand. But by utilizing stronger systems and molding a tech-savvy staff, firms can often increase productivity and better serve clients.

"Lawyers need to invest in training lawyers in technology, not just Outlook and Word," Byrne says. "They need to know how to serve clients, working with time tracking and the research and collaboration aspect of technology."

Robert Burger is Chief Operating Officer at 170-attorney intellectual property firm Sterne, Kessler, Goldstein & Fox, and started in the industry 25 years ago as a paralegal. Burger's firm employs nonattorney liaisons who interact directly with firm clients to determine their value proposition - and ensure they're being met.

"We look at how we're utilizing technology to collaborate in a paperless environment, and what efficiencies can be gained," Burger says. "Understanding data management is really critical; you have to become a subject matter expert."

C-suite marketing concerns

"[Marketing] all starts with strategy; and C-level executives are responsible for putting together a strategy and implementing it," Burger says.

Because marketing has become so entwined with business development efforts in recent years, chief marketing officers (CMOs) may find many firm members weigh in on promotional plans.

"If I'm a CMO, I have many, many bosses on any given day, whether they're lawyers, other staff members or senior management," Byrne says. "You really have to be engaged at all levels to be successful."

Spread the firm's desired marketing message far and wide to engage employees. "Use every medium possible, whether it's a lot of meetings or a lot of email or a portal where people can share ideas," Burger says.

As with many firm functions, a marketing program's success all comes down to communication: developing relationships with different staff member tiers to ensure marketing program buy-in and consistent messaging.

"At law firms, dictating doesn't work, usually," Byrne says. "You have to gain a consensus and work hard to create a culture of service with the staff - the more you invest in relationships, the greater success you're going to have."

 

C-SUITE TRAINING: BUILDING POTENTIAL

Groysberg suggests law firms create programs that provide business-related skills that may not be second nature to law school grads, such as on-the-job training and mentoring programs. Executives implementing methods they've used in the corporate world should be aware, though, that customization is the key.

"You can't take everything GE does and put it in a law firm," Groysberg says. "No partner, for example, would attend a 7-day program; someone will look at their watch or Blackberry on day one or two and say, 'I need to go see clients,' and leave."

More firms are now conducting workshops to help senior associates and other employees learn valuable leadership and management skills, such as managing client relationships, according to Groysberg.

"It used to be that workshops were only for equity partners," Groysberg says. "Now you see more and more people realizing that a promotion to a managing partner is not the time to start development; it should happen years before that promotion."

 

FITTING IN TO FIRM CULTURE

Even the most qualified C-level business executive candidate can find acclimating into a law firm difficult, due to the typical firm structure. Now that we've reviewed many of the skillsets required by a C-level law firm executive, and acknowledged that attorneys may not always be right for the job, how do we ease our new chiefs into firm life and promote acceptance of these leaders from throughout the firm?

Simmons, whose firm published an executive trend analysis on C-suite activity at more than 665 companies in 2012, says law firms don't always have the best systems in place to welcome new C-level positions, such as a chief financial officer (CFO).

"If they don't have the support of the partnership, [a CFO] can find himself in a support staff function, being sidelined and not having a voice because you're not coming in as a partner," Simmons says.

Green says, "You deal with a lot of big personalities in each firm," adding, "It's like running an investment bank - there's often [several] people trying to lead. You need to have a lot of influence and know how to manage that."

The ability to build relationships with people who can champion for you is a crucial component of Csuite firm integration.

"It's a challenge," Simmons says. "When a big attorney gets recruited to another law firm and people see his book, other attorneys understand how he built up credibility. When support functions come in, people may scratch their head and say, 'We got a new CFO, great.'"

Success may rely on firm leadership's public support.

"Whatever position is top of the house has to immediately give his or her support to that individual," Simmons says. "That can be done through formal introductions, firm or team meetings or just through an e-mail announcement - but showing that support is really important."

 

AN EFFECTIVE EXECUTIVE DECISION: THE IMPACT OF A C-SUITE PROFESSIONAL

At the end of the day, bringing in c-level business professionals can help a firm's bottom line.

Law firms count on equity partners to bring in business. Equity partners reported, on average, more than three times the originations that non-equity partners produced in 2012, according to talent placement firm Major, Lindsey & Africa's Partner Compensation Survey.

At many traditional companies, successful producers who are promoted to management level are primarily expected to manage employees. However, law firms don't often operate that way, and not all attorneys are cut out - or trained - for that type of multi-tasking.

"When you're a partner at a law firm and get promoted to be the head of the office or managing partner, you have to manage, but you still have to [work with] clients and have a book of business," Groysberg says. "You do three jobs."

Outsourcing the operational work to an experienced business professional can free up top-producing lawyers to practice law and recruit new business. Additionally, law firms have become complex, highly competitive organizations, which is why Robert Burger says today's firms need business professionals on board. "Law firms have to be at their best, and many are looking to hire specialists that understand business," Burger says.

"Work with lawyers," Byrne says. "You don't necessarily have to have a top-down approach, but it needs to be branded in a certain way."

 

ABOUT THE AUTHOR

Erin Brereton specializes in writing articles and white papers about the legal industry, business management, finance and other topics. 

 

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